SEC approves sweeping changes to FINRA's regulatory reporting rules

Purpose – This paper seeks to explain Financial Industry Regulatory Authority (“FINRA”) Rule 4530, which requires members to report to FINRA certain internal and external findings of violative conduct and quarterly statistical and summary customer complaint information.Design/methodology/approach – The paper explains the background and provides an overview of FINRA Rule 4530; analyzes key provisions of the Rule, including the way it differs from legacy NASD and New York Stock Exchange Reporting Rules; and discusses next steps for FINRA members.Findings – FINRA Rule 4530 requires members to promptly report findings of internal and external violations and provides interpretive guidance regarding these requirements. The new Rule imposes obligations beyond those set forth in current NASD Rule 3070, requires reporting of internal findings, and alters the now familiar materiality standard applied to NYSE Rule 351(a).Practical implications – The new Rule will require members to enhance their policies and procedu...